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Let\u2019s quickly review the differences between finance versus lease.<\/p>\n
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Lease<\/strong>: You\u2019re paying to loan the car for a fixed period of time. At the end of the period, you return the vehicle and you can take out a new lease or extend your current lease.<\/p>\n <\/p>\n Finance<\/strong>: You\u2019re purchasing the vehicle through a loan from a bank or dealership and paying in monthly intervals until the loan is paid off.<\/p>\n <\/p>\n <\/p>\n So, car finance or lease, which is better? The truth is that both are great options, depending on your individual situation.<\/p>\n <\/p>\n In general, lease payments are lower than finance payments because you\u2019re only paying to \u201crent\u201d the vehicle, whereas with financing, you\u2019re paying to own the vehicle. However, in the long run, financing can cost less since you\u2019ll eventually be payment free and own your vehicle outright.<\/p>\n <\/p>\n Here\u2019s a quick review of the benefits of each vehicle purchase option:<\/p>\n <\/p>\n Benefits of Leasing:\u00a0<\/strong><\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n Depending on your priorities, either option might be a better fit for you. Determining your long-term goals is your best bet for figuring out if you should choose to finance or lease your next vehicle.<\/p>\n <\/p>\n For example, if you\u2019re eventually looking to own a car and save money long-term, financing is the way to go. But if you\u2019re not sure you want to own a vehicle and are looking to save money right now on payments, leasing might be the right choice for you.<\/p>\n <\/p>\n Tax Benefits of Finance vs Lease<\/strong><\/p>\n <\/p>\n So, what about if you own a small business? If you\u2019re using your vehicle for your business, you\u2019ll be able to claim some or all of the costs on your taxes. For both leasing and financing, you can claim the gas, insurance, maintenance and more on your taxes for the portion that you use the vehicle for work. But both options have even more tax benefits.<\/p>\n <\/p>\n Tax Benefits of Leasing<\/strong><\/p>\n <\/p>\n When leasing a vehicle, you can claim some of the lease cost on your taxes if you\u2019re using it for business purposes. The amount you claim depends on how much you use it for work (e.g. 50% of your lease cost if you use the vehicle half the time for work).<\/p>\n <\/p>\n Keep in mind that you can only claim up to $800 plus taxes per month for a maximum of $9,600 each year. So if your yearly lease payment is $4,200 and you use it 80% of the time for business purposes, you could deduct $3,360 on your tax return that year. However, it\u2019s important to note that because the CRA limits the depreciation on luxury cars, it also slightly limits lease payments on these cars as well.<\/p>\n <\/p>\n Tax Benefits of Financing<\/strong><\/p>\n <\/p>\n For financing, the amount you can claim depends on how much was paid at the time of the vehicle acquisition.\u00a0 However, part of the loan is also tax deductible, to a maximum each month. So how does it work?<\/p>\n <\/p>\n Buying a vehicle outright that you use for your business means you are now eligible to claim Capital Cost Allowance, also known as depreciation, which is 30% per year and it\u2019s tax deductible.<\/p>\n <\/p>\n However, any car that costs more than $30,000 is considered a luxury car in the eyes of the CRA, which limits the amount of depreciation that can be claimed. But this can be offset thanks to the Accelerated Investment Incentive, which allows for higher depreciation in the year of purchase.<\/p>\n <\/p>\n As well, if you use a loan to purchase the car, you can deduct the interest paid on the loan based on the amount of time it\u2019s used for business purposes. You can claim interest costs up to a maximum of $300 per month.<\/p>\n <\/p>\n When it comes to the tax benefits of financing vs. lease, we can help you determine which option is best for tax savings that help your small business succeed.<\/p>\n <\/p>\n![\"\"](\"http:\/\/ws-srv-php81.in.webmyne.com\/Aacon.io\/wp-content\/uploads\/2023\/10\/42-300x199.jpg\")
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\nBenefits of Financing:<\/strong><\/p>\n\n
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